SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

[X]     QUARTERLY  REPORT  UNDER  SECTION  13  OR  15(d)
        OF  THE  SECURITIES  EXCHANGE  ACT  OF  1934

     For  the  quarterly  period  ended  June  30,  2001
     or

[  ]    TRANSITION  REPORT  PURSUANT  TO  SECTION  13  OR
        15(d)  OF  THE  SECURITIES  EXCHANGE  ACT  OF  1934
        For  the  transition  period  from     to

                        Commission file number: 333-39254

                             EXPORT EREZ USA, INC.
              (Exact name of small business issuer in its charter)

       Delaware                                       52-2237043
---------------                                       ----------
(State  or  other  jurisdiction  of                (I.R.S. Employer
incorporation  or organization)                    Identification No.)

                               Industrial Zone Erez
                                  P.O. Box 779
                             Ashkelon, Israel 78101
              ----------------------------------------------------
              (Address of principal executive offices)  (zip code)

                 Issuer's Telephone Number:  011 972 7 689 1611

Indicate  by check mark whether the registrant (1) filed all reports required to
be  filed  by  Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  last 12 months (or for such shorter period that the registrant was required
to  file such reports), and (2) has been subject to such filing requirements for
the  past  90  days.

                    Yes   X                  No

Indicate  the  number  of  shares outstanding of each of the issuer's classes of
common  equity,  as  of  the  latest  practicable  date.


            Class                         Outstanding  at  June  30,  2001

Common  Stock,  par  value  $0.0001       13,157,900

<PAGE>
                                     PART I
                   PART  I  --  FINANCIAL  INFORMATION

ITEM  1.  FINANCIAL  STATEMENTS



                              EXPORT EREZ USA, INC.
                                AND SUBSIDIARIES
                        CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF JUNE  30, 2001

<PAGE>
<TABLE>
<CAPTION>
                                   CONTENTS
                                 -----------



<S>           <C>    <C>
PAGES        1 - 2   CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2001 (UNAUDITED) AND DECEMBER 31, 2000

PAGE         3       CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)
                     FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000 (UNAUDITED)

PAGE         4       CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE
                     SIX MONTHS ENDED JUNE 30, 2001 AND 2000 (UNAUDITED)

PAGES        5 - 6   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2001


</TABLE>
<PAGE>


                       EXPORT EREZ USA, INC. AND SUBSIDIARIES
                            CONSOLIDATED BALANCE SHEETS
                       --------------------------------------

<TABLE>
<CAPTION>

                                           ASSETS
                                           ------
                                                          June 30, 2001
                                                           (Unaudited)    December 31, 2000
                                                          -------------  ------------------
CURRENT ASSETS
<S>                                                        <C>           <C>
Cash and cash equivalents                                  $    698,004  $          663,295
Trade accounts receivable, net                                2,818,471             901,382
Trade accounts receivable - related parties, net                191,193               6,049
Other receivables and debit balances                            484,651              37,228
Inventory                                                     2,150,446             892,466
Deferred taxes                                                   66,968              33,077
                                                           ------------  ------------------
   Total Current Assets                                       6,409,733           2,533,497
                                                           ------------  ------------------

NON-CURRENT ASSETS
Investment in marketable securities                             694,663             795,074
Deposits for the severance of employer-employee relations       460,084             261,095
Deferred taxes                                                  719,994              52,952
Intangible assets                                                70,200              77,963
                                                           ------------  ------------------
   Total Non-Current Assets                                   1,944,941           1,187,084
                                                           ------------  ------------------

PROPERTY, PLANT AND EQUIPMENT, NET                            2,063,582             404,751
                                                           ------------  ------------------
TOTAL ASSETS                                               $ 10,418,256  $        4,125,332
------------                                               ============  ==================


    The accompanying notes are an integral part of the financial statements.


                                      -1-
</TABLE>
<PAGE>
                     EXPORT EREZ USA, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                      ------------------------------------
<TABLE>
<CAPTION>
                      LIABILITIES AND SHAREHOLDERS' EQUITY
                      ------------------------------------


                                                           June 30, 2001
                                                            (Unaudited)     December 31, 2000
                                                           -------------  -------------------
<S>                                                          <C>           <C>
CURRENT LIABILITIES
Short-term bank credit                                       $ 3,309,726   $          716,482
Trade accounts payable                                         2,422,179             1085,755
Other accounts payable and credit balances                       808,324              277,966
                                                             -----------   ------------------
   Total Current Liabilities                                   6,540,229            2,080,203
                                                             ------------  ------------------

LONG - TERM LIABILITIES
Long-term loan                                                    11,496               10,885
Related party loan payable                                        51,551                    -
Provision for the severance of employer-employee relations       428,446              180,121
                                                             ------------  ------------------
   Total Long-Term Liabilities                                   491,493              191,006
                                                             ------------  ------------------

TOTAL LIABILITIES                                              7,031,722            2,271,209
                                                             ------------  ------------------
MINORITY INTERESTS                                               484,955                   -
                                                             ------------  ------------------
SHAREHOLDERS' EQUITY
Preferred stock, $0.0001 par value, 20,000,000 shares
authorized, none issued and outstanding                                -                    -
Common stock, $0.0001 par value, 100,000,000 shares
 authorized, 13,157,900 and 12,500,000 issued and
outstanding                                                        1,316                1,250
Additional paid-in capital                                     1,146,169              159,385
Retained earnings                                              2,036,631            1,823,902
Accumulated other comprehensive income (loss)                   (282,537)            (130,414)
                                                              -----------  -------------------
   Total Shareholders' Equity                                  2,901,579            1,854,123
                                                             ------------  -------------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                   $10,418,256   $        4,125,332
------------------------------------------                   ============  ===================


    The accompanying notes are an integral part of the financial statements.

                                      -2-
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
                                   EXPORT EREZ USA, INC. AND SUBSIDIARIES
                                    CONSOLIDATED STATEMENTS OF INCOME
                                     AND COMPREHENSIVE INCOME (LOSS)
                                             (UNAUDITED)
                                             -----------

                                                    For the Three   For the Three  For the Six   For the Six
                                                        Months         Months        Months       Months
                                                       Ended June    Ended June    Ended June    Ended June
                                                        30, 2001      30, 2000      30, 2001      30, 2000
                                                      ------------  ------------  ------------  ------------
<S>                                                   <C>           <C>           <C>           <C>
REVENUES                                              $   942,188   $ 1,288,978   $ 2,039,258   $ 2,546,069
Cost of sales and processing                              616,126       848,669     1,373,989     1,576,637
                                                      ------------  ------------  ------------  ------------
Gross profit                                              326,062       440,309       665,269       969,432
                                                      ------------   -----------  ------------  ------------

OPERATING EXPENSES
Selling expenses                                           40,292        60,458       101,897        96,292
General and administrative expenses                       182,296       240,331       264,568       339,107
                                                      ------------   -----------  ------------  ------------
TOTAL OPERATING EXPENSES                                  222,588       300,789       366,465       435,399
                                                      ------------   -----------  ------------  ------------
INCOME FROM OPERATIONS                                    103,474       139,520       298,804       534,033
                                                      ------------   -----------  ------------  ------------
OTHER INCOME (LOSS)
Interest, dividends and gain (loss) on sale of
securities income, net                                    (41,012)      (20,724)      (30,046)      (62,238)
Other income - net                                         31,116           (13)       49,028         2,289
Minority interest                                          (7,313)            -        (7,313)            -
                                                      ------------   -----------  ------------  ------------
TOTAL OTHER INCOME (LOSS)                                 (17,209)      (20,737)       11,669       (59,949)
                                                      ------------   -----------  ------------  ------------
INCOME BEFORE INCOME TAXES                                 86,265       118,783       310,473       474,084
Income tax expense                                         14,766       100,195        97,743       224,545
                                                      ------------   -----------  ------------  ------------
NET INCOME                                            $    71,499   $    18,588   $   212,730   $   249,539
----------                                            ------------   -----------  ------------  ------------

OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation gain (loss)                   15,702       (19,564)      (58,142)       20,038
Unrealized gain (loss) on available-for-sale
 securities                                                31,023       (18,077)      (93,982)       54,228
                                                      ------------   -----------  ------------  ------------
Other comprehensive income (loss) before tax               46,725       (37,641)     (152,124)       74,266

Income tax (expense) benefit related to items of
 other comprehensive income                               (16,821)       13,551        54,765       (26,736)
                                                      ------------   -----------  ------------  ------------
TOTAL OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX        29,904       (24,090)      (97,359)       47,530
                                                      ------------   -----------  ------------  ------------
COMPREHENSIVE INCOME (LOSS)                           $   101,403   $    (5,502)  $   115,371   $   297,069
---------------------------                           ============   ===========  ============  ============

Net income per ordinary share - basic and diluted     $      0.01   $      0.00   $      0.02   $      0.02
                                                      ============   ===========  ============  ============
Weighted average number of shares outstanding
during the period - basic and diluted                  12,593,986    12,203,297    12,547,252    12,101,648
                                                      ============   ===========  ============  ============



    The accompanying notes are an integral part of the financial statements.
</TABLE>
                                      -3-

<PAGE>

                                   EXPORT EREZ USA, INC. AND SUBSIDIARIES
                                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                  (UNAUDITED)
                                   --------------------------------------
<TABLE>
<CAPTION>
                                                                                   For The Six      For The Six
                                                                                  Months Ended     Months Ended
                                                                                  June 30, 2001    June 30, 2000
                                                                                 ---------------  ---------------
<S>                                                                              <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income                                                                       $      212,730   $      249,539
Adjustments to reconcile net income to net cash provided by (used in) operating
 activities:
Depreciation and amortization                                                            55,431           36,736
Stock based compensation                                                                      -          153,900
Gain from investment in marketable securities                                                 -           (3,269)
Gain from sale of fixed assets                                                          (15,377)          (2,289)
Decrease (increase) in deposits for employee severance                                    1,426            9,901
Decrease (increase) in deferred taxes                                                       221             (915)
Decrease (increase) in trade accounts receivable                                       (337,345)        (564,386)
Decrease (increase) in other receivables and debit balances                               4,486           93,263
Decrease (increase) in inventory                                                         22,860              640
Increase (decrease) in trade accounts payable                                           (51,457)        (348,104)
Increase (decrease) in other accounts payable and credit balances                       109,082          296,276
Increase (decrease) in provision for employee severance                                   7,676                -
                                                                                 ---------------  ---------------
   Net Cash Provided By (Used In) Operating Activities                                    9,733          (78,708)
                                                                                 ---------------  ---------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets                                                                (60,927)         (53,880)
Proceeds from sale of fixed assets                                                       17,392            2,446
Investment in marketable securities                                                     (18,397)        (318,626)
Proceeds from sale of marketable securities                                                   -        1,420,141
Cash acquired in acquisition of Achidatex                                                39,147                -
Advances related to acquisition, net                                                     56,820                -
Loan to subsidiary                                                                     (480,000)               -
                                                                                 ---------------  ---------------
   Net Cash Provided By (Used In) Investing Activities                                 (445,965)       1,050,081
                                                                                 ---------------  ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Short-term bank credit, net                                                             515,141       (1,117,165)
Long-term bank credit, net                                                                    -          102,789
Proceeds used to pay long-term loan                                                     (10,885)               -
                                                                                 ---------------  ---------------
   Net Cash Provided By (Used In) Financing Activities                                  504,256       (1,014,376)
                                                                                 ---------------  ---------------
Effect of exchange rate changes on cash                                                 (33,315)          10,818
                                                                                 ---------------  ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                     34,709          (32,185)

CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD                                         663,295          681,291
                                                                                 ---------------  ---------------
CASH AND CASH EQUIVALENTS - END OF PERIOD                                         $     698,004       $  649,106
-----------------------------------------                                        ===============  ===============

INTEREST PAID                                                                     $     43,665        $   51,859
                                                                                 ===============  ===============
TAXES PAID                                                                        $     59,407        $  131,669
----------                                                                       ===============  ===============

    The accompanying notes are an integral part of the financial statements.
</TABLE>
                                      -4-
<PAGE>

                     EXPORT EREZ USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              AS OF JUNE 30, 2001
                            -----------------------

NOTE  1     BASIS  OF  PRESENTATION
-------     -----------------------

The  accompanying unaudited consolidated financial statements have been prepared
in  accordance  with  generally accepted accounting principles and the rules and
regulations  of  the  Securities  and  Exchange Commission for interim financial
information.  Accordingly, they do not include all the information and footnotes
necessary  for a comprehensive presentation of financial position and results of
operations.

It  is  management's opinion that all material adjustments (consisting of normal
recurring  adjustments)  have been made which are necessary for a fair financial
statement  presentation.  The results for the interim period are not necessarily
indicative  of  the  results  to  be  expected  for  the  year.

For  further  information,  refer  to  the consolidated financial statements and
footnotes  included in the Company's Form 10-KSB for the year ended December 31,
2000.

NOTE  2     INVENTORY
-------     ---------

Inventory  at  June  30,  2001  consisted  of  the  following:

Raw materials                                 $     1,107,449
Work in process                                       314,138
Finished goods                                        728,859
                                             ----------------
                                              $     2,150,446
                                             ================

NOTE  3     LONG-TERM  LOAN
-------     ---------------

On  February  1,  2000,  the  Company's wholly owned subsidiary Export Erez Ltd.
borrowed  $123,750  at  an  interest  rate  of  10.8%.  The terms are 24 monthly
payments commencing March 1, 2000 with each payment consisting of a fixed amount
of  principal  along with accrued interest.  As of June 30, 2001, the balance of
the  loan  was  $40,267,  all  of  which  is included in short-term bank credit.

On  March  7,  2000,  Achidatex  Nazareth  Elite  (1977) Ltd. ("Achidatex"), the
Company's  newly  acquired  subsidiary,  borrowed $27,500 at an interest rate of
8.18%  (See Note 5).  The terms are 36 monthly payments commencing April 1, 2000
with  each  payment consisting of a fixed amount of principal along with accrued
interest.  As  of  June  30,  2001,  the balance of the loan was $16,006, of
which  $4,510 is included in short-term bank credit and $11,496 is included
in  long-term  loan.

NOTE  4     STOCKHOLDERS'  EQUITY
-------     ---------------------

In  June  2001,  the Company authorized the issuance of 657,900 shares of common
stock  to  acquire  76%  of  the  outstanding  shares of Achidatex (See Note 5).
Although  the  stock  certificates  for  the  657,900 shares were not physically
issued  until August 8, 2001, the shares were effectively issued as of June
18,  2001.

    The accompanying notes are an integral part of the financial statements.


                                      -5-
<PAGE>
                     EXPORT EREZ USA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              AS OF JUNE 30, 2001
                            -----------------------

NOTE  5     ACQUISITION  OF  SUBSIDIARY
-------     ---------------------------

ACHIDATEX  NAZARETH  ELITE  (1977)  LTD.
----------------------------------------

Effective  June 18, 2001, the Company acquired 76% of the total share capital of
Achidatex  Nazareth Elite (1977) Ltd. ("Achidatex") by issuing 657,900 shares of
its  common  stock valued at $1.50 per share resulting in a total purchase price
of  $986,850.  The  acquisition  has  been  accounted  for  as  a  purchase, and
accordingly, the consolidated financial statements have been prepared to include
the  results  of operations of Achidatex beginning from the date of acquisition.
The  excess  of  the total net fair value of the assets acquired of $1,512,668
over the purchase price of $986,850, in the amount of $525,818, has been
recorded as a reduction in the fair market value assigned to the fixed assets
of  Achidatex.

NOTE  6     PURCHASE  OF  ASSETS
-------     --------------------

On  May 9, 2001, the Company purchased from Orlite Ltd. $7,245 of equipment and
$13,025 of inventory used in the production of ballistic helmets including
intangible knowledge.  The Company  began manufacturing ballistic helmets
during the period and the results are  included  in  the  accompanying
financial  statements.

NOTE  7     SEGMENTS
-------     --------

The  Company  has  two  strategic  business  units:  the civilian market and the
military  market.  The  military market is further broken down between local and
export sales in order to better analyze trends in sales and profit margins.  The
Company  does  not  allocate  assets between segments because several assets are
used  in  more  than  one  segment  and  any  allocation  would  be impractical.
<TABLE>
<CAPTION>
                        Civilian    Military    Military
                          Local      Local       Export   Consolidated
                        ---------   --------    --------  ------------
<S>                     <C>           <C>         <C>         <C>
June 30, 2001
Net Sales                 960,620    804,102     274,536    2,039,258
Income from operations    177,604     94,086      27,114      298,804

June 30, 2000
Net Sales               1,082,079    864,305     599,685    2,546,069
Income from operations    324,793    104,781     104,459      534,033
</TABLE>


                                      -6-
<PAGE>





ITEM  2.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF
          FINANCIAL  CONDITION  AND  RESULTS  OF  OPERATIONS

OPERATIONS

     Export  Erez  USA,  Inc.  is  a  holding company whose subsidiaries, Export
Erez, Ltd. and  Mayotex.  Ltd., have  been  operating  in excess of ten years.
Export  Erez  Ltd.  was formed and registered on January 23, 1983 under the name
R.T.V.  Ltd.  as  a  limited shares company under the Companies Ordinance of the
State  of  Israel  and  changed  its name to Export Erez Ltd. on April 25, 1987.
Export  Erez  Ltd.  primarily  produces and markets textile products designed to
provide  personal  protection,  such  as bulletproof vests, and associated heavy
fabric  products,  such  as  tents  and  other camping equipment.  It has been a
supplier  to  the  Israeli  military  for  over  12  years.

     Mayotex  Ltd.  was  formed  and  registered  on  March 7, 1990 as a limited
liability company under the Companies Ordinance of the State of Israel.  Mayotex
is  engaged  in  weaving,  improving,  processing, dyeing, cutting and sewing of
fabric  to  make the heavy-duty and sometimes bulletproof fabrics used by Export
Erez  Ltd.  to  manufacture  its  finished  products  and  goods.

     In  October  2000,  Export  Erez  Ltd.  created a wholly-owned subsidiary,
Dragonwear  Trading  Ltd. which is incorporated in Cyprus and is involved with
trading textile products.

     The Company's  facilities are staffed partly (approximately 27%) by a
Palestinian  workforce, hired with the cooperation of the Palestinian Authority.
Should  the  Middle  East  peace  process  continue  to  lead  to  a decrease in
hostilities  and  normalization  of  relations  with the Arab and Islamic world,
the Company believes that its history of cooperation and employment with the
Gazan  Palestinians  and the Palestinian Authority will lead to opportunities to
penetrate  markets  in  the  Arab  and Islamic world. If needed, the Company
believes  that it will be able to employ Israeli workers to satisfy its demands.

    The Company anticipates  that  it  may expand its operations through
development  of  its own marketing and sales and through acquisitions of similar
or  related  companies. The Company is currently in discussions with a company
with  a  similar  product  line  for  a  possible  acquisition or other business
alliance. The Company is in the process of analyzing such a transaction and has
not yet entered into any agreements to proceed.  If the Company enters into a
business  combination,  it  will  file  a  Form  8-K  noticing such transaction.

OVERVIEW

     Export  Erez  USA's  strategic  objectives  are  as  follows:

     - To  develop  high  tech  products, including:  stab-proof fabric,
       ballistic helmets,  ballistic  ceramic  boards, one-way protective
       windows,  Kevlar fabric, dry storage,  ballistic  wall  coverings,  and
       oil and fuel pillow type storage tanks in  the  year  2001  to  2002.

     - To increase its share of the local defense market to about 35% by
       the year 2004.

     - To increase its share of the local civilian market to about 25% by
       the year 2004.

     - To  penetrate the international defense market with business worth
       about $1 million  growing  by  about  $1.5  million  per  annum  to
       the  year  2004.

     - To  extend  activity  in  the  international  civilian market
       starting with activity  worth  about $0.3 million growing by about
       $0.5-0.75 million per annum to  the  year  2004.


                                      -7-
<PAGE>
ACHIDATEX  NAZARETH  ACQUISITION

     On  June  12,  2001 the Company entered into an agreement with
Achidatex Nazareth Illit Ltd., Achidatex Ltd., and the shareholders of Achidatex
Nazareth  for  the  acquisition  of  76%  of the outstanding shares of Achidatex
Nazareth  in  exchange for the issuance of shares of common stock of Export Erez
USA  aggregating  657,900  common  shares  which  represents  5%  of  its  then
outstanding  shares  of  common  stock.  Export Erez USA has agreed that such 5%
ownership  of  shares  shall  not  be  diluted  as  a  result of its issuance of
additional shares until closing of the first public offering of the common stock
of the Company.  As part of the agreement, all patents connected with Achidatex
Nazareth  and  held  by  its  shareholders  or  anyone  on their behalf shall be
transferred to the Company.  Achidatex Nazareth is the manufacturer/ producer of
ballistic  shields,  long  term  storage systems, combat flak jackets and tents.

     The  Company  has agreed to loan Achidatex Nazareth $500,000 for payment to
Bank  Hapoalim Ltd. against the release of an existing encumbrance in the amount
of  $900,000.  The  Company  has  also  agreed  to  give  to Bank Igud of Israel
securities  and/or  guarantees  in  the  amount of $500,000 to secure the credit
given  by  Bank  Igud  to  Achidatex  Nazareth.

     Joseph  Postbinder,  the  President  and  Chairman of Export Erez USA, will
nominate  the  Chairman  of  the  Board  of  Directors  of  Achidatex  Nazareth.

     The  acquisition  was  effected  on  June  18,  2001.

RESULTS  AND  PLAN  OF  OPERATIONS

     During  1999,  bulletproof  vests developed by the Company were sent to
laboratories  in  the  United  States  for testing, and following the tests, the
products  were  deemed to have met the American N.I.G. standard.  Obtaining this
standard  is intended to provide the Company's products with entree into the
American  market,  and  to  encourage  development  of  other  markets.

     During  1999, the Company enlarged its Internet Web site in order to
participate  in the worldwide trend towards more electronic trade.  The web site
is  located  at  www.exporterez.co.il.
                 ---------------------

     At the  end of 2000 and beginning of 2001, the Company purchased heavy
machines  and knowledge in manufacturing ballistic ceramic boards and started to
produce  and  sell  in  Israel  and  abroad  its  new  products.

     Expanding  its  product range requires the Company to make considerable
investments  in research and development, and penetrating markets outside Israel
also  involves heavy expenses.  The Company intends to develop the following
products  between  2001  and 2003: anti-stab cloth, ballistic helmets, ballistic
ceramic  plates,  one-way  protective  windows,  Kevlar  fabric,  dry  storage,
ballistic  wall  coverings,  and  oil  and  fuel  pillow  type  storage  tanks.

     The Company intends to spend funds, when and if available, on commencing
production  and  marketing  of  new  products, construction of a new
manufacturing  and  office  complex,  new  equipment  and upgrading its existing
equipment.

     The Company intends to apply for listing on the NASD OTC Bulletin Board
or  for  quotation of its securities on the Nasdaq SmallCap Market. The
Company anticipates that it will offer additional shares of its common stock
to the public  with  a  view toward raising additional capital with which to
effect its development  plans.  Management also believes that if the Company is
able toestablish  a  public  trading  market  on  the NASD OTC Bulletin Board
or Nasdaq SmallCap  Market it will increase the Company's visibility to
government authorities  and  additional  potential  civilian  customers.

                                      -8-
<PAGE>
     In  March 1999, the Company signed a limited partnership agreement with
Orlite  Ltd.,  a  public  company  whose  stock  is traded on the Tel Aviv stock
exchange, for the  production of ballistic helmets for export from Israel.  The
partnership  operated  throughout  1999  on  a  limited  basis only, because the
approval  required  from  the  Business  Restrictions Authority had not yet been
given.  Approval  was  expected in the course of the year 2001.  Export Erez USA
and  Orlite  Ltd.  have  terminated the partnership.  On May 9, 2001 Export Erez
USA  purchased  all of the equipment  and know-how of Orlite Ltd. for production
of  ballistic helmets and Export Erez USA will produce and market the helmets by
itself.

SIX  MONTHS  ENDED  JUNE  30,  2001  COMPARED TO SIX MONTHS ENDED JUNE 30, 2000

     Sales  in  the six  months  ended  June 30, 2001 decreased to 2,039,258
compared  to  $2,546,069 for the same six months in 2000 due to decrease in
local military demand  but  the  decrease  is temporary because of the
situation in Israel. The demand  is  anticipated  to increase.

     The cost of sales and processing decreased in the six months ended June 30,
2001  to $1,373,989 compared to $1,576,637 for the same six months in 2000
due to decrease  in  sales.

     Selling  expenses  in  the six  months  ended  June 30, 2001 increased to
$101,897 compared to $96,292 for the same six months in 2000.  This change
is the result of efforts the Company  made to increase the civilian  market.

     General  and  administrative  costs  in  the six months ended June 30, 2001
decreased  to  $264,568 compared to  339,107 for  the  same six months in 2000,
primarily  the  result  of  the  company's  efforts  to  cut  costs.

THE  YEAR  ENDED  DECEMBER 31, 2000 COMPARED TO THE YEAR ENDED DECEMBER 31, 1999

     In  2000, revenues of $4,490,961 remained relatively constant with revenues
in  1999  of  $4,490,898.  The  cost of raw materials in 2000 of $2,126,334 rose
slightly  from$2,106,825  in 1999.  Salaries and related expenses decreased from
$858,592  in  1999  to  $653,152  in  2000.  The  cost  of  sales and processing
decreased  from$3,121,674  in  1999 to $2,856,626 in 2000 due predominantly to a
decrease  in salaries and related expenses of $205,440.  Export Erez USA's gross
profit  rose from $1,369,224 in 1999 to $1,634,335 in 2000 due to the decrease
in cost  of  sales.

     General  and  administrative  costs  increased  from  $457,218  in  1999 to
$602,606  in  2000  primarily  as a result of increased salaries and expenses in
2000  of  $311,125  from  $107,025  in  1999.

     In  2000, financial expenses increased to $(113,027) in 2000 from financial
income in 1999 of $88,934 primarily as a result of a decrease in dividend income
from  marketable  securities  of  $217,603.

     Most  company  sales are the result of winning tenders in both the domestic
market  and the world market.  The tenders are obtained through agents which the
company  operates in the local and overseas market.  Below is the composition of
sales  for  1999  and  2000:
                                                 1999  ($)          2000  ($)
                                                 ---------          ---------

Sales  to  the  local  market-civilian          $1,508,860          1,630,860
Sales  to  the  local  market-military           2,268,921          1,580,334
Export  sales-military                             713,117          1,279,767
     Consolidated                               $4,490,898          4,490,961

                                      -9-
<PAGE>

     In  2000, the Company increased its number of customers but decreased
amount of its sales to single customers exceeding 10% of sales from one customer
in  1999 of $2,073,623 to two customers in 2000 aggregating $1,886,977 in sales.
The sales to the military local market dropped in 2000 by 30%.   Export Erez had
forecasted this drop and increased its efforts to penetrate to new markets.  The
Company  believes its efforts were successful and anticipates open order demands
from  the  local  military  market  to  be  greater  in  2001  than  in  2000.

     Selling  expenses increased from $ 244,775 in 1999 to 328,012 in 2000 (34%)
because  of  the  Company's  efforts  to  increase  its  exports.

     In  2000,  net  cash provided by operating activities increased to $357,739
from  $122,148 in 1999 primarily due to an increase in stock issued for services
of  $153,900  in  2000  and  an  increase  in  other accounts payable and credit
balances  of  $68,616.

     In 2000, net cash provided by (used in) investing activities increased from
$(1,617,965  used  in) in 1999 to $937,684 provided in 2000.  This was primarily
the  result  of  the  Company's  investment  in marketable securities in 1999 of
$1,543,577  and  the  proceeds  from  the  subsequent  sale  of  the  marketable
securities  in  2000  of  $1,424,264.

     In 2000, net cash (used in) provided by financing activities decreased from
$1,505,236  provided  in  1999 to $(1,333,604 used in) 2000.  This was primarily
the  result  of  the  repayment  in  2000  of $1,344,393 in short term debt, the
proceeds  of  which,  in  the  amount  of  $1,505,236,  were  received  in 1999.

     Cash  and cash equivalents at December 31, 2000 of $663,295 were comparable
to  cash  and  cash  equivalents  at  December  31,  1999  of  $681,291.

OPEN ORDERS

     Unfulfilled  open  orders  at  June  30,  2001,  totaled $3,000,000 and are
scheduled  for  filling  within  the  next  three  months.  Open orders included
certain  orders  of  Achidatex.

LIQUIDITY  AND  CAPITAL  RESOURCES

     The Company's current activities are financed by short term bank loans
balanced by short term deposits.  The decision regarding the amount of the loans
was  derived  from considerations of the yield on the deposit which is generally
in  foreign  currency  (receipts  from  overseas sales), compared to the cost of
short  term loans.

     In  the  years  2001  and  2002, the Company anticipates increasing its
research  and  development  of  certain  items,  primarily  ballistic  helmets,
stab-resistant  fabric, ceramic ballistic plates and one-way protective windows.
The Company anticipates  total  research and development expenses for 2001 and
2002 at approximately $3,950,000 and $3,250,000, respectively. The Company
anticipates  that  in the year 2003 research and development expenses will
decrease to  approximately  $350,000.

     The  development  of  these  products will be with staff engineers. The
Company will work in the development of the ballistic helmets. The Company
anticipates  that these products will be produced at 20% of capacity in the
year 2002 increasing to full  production  by the year 2005. The Company
anticipates  that  in  order  to  fund  the  research  and development for
these products,  it  may  effect an offering of its equity securities.  If
the Company is unable  to effect an offering of its securities, it may fund
its research and  development  through its operating funds.  In such event,
the timing of its anticipated research and development and subsequent
production schedule would be slowed.

     The Company borrowed  N.I.S 2,000,000 from bank Hapoalim to invest in
Achidatex Nazareth. The loan is linked to the Consumer Price Index. The Company
will  give  Bank  Igyd  of  Israel  guarantees  in  the  amount  of
$500,000  to  secure  the  credit  given  by  Bank  Igyd  to  Achidatex.

                                      -10-
<PAGE>

           PART  II  --  OTHER  INFORMATION

ITEM  1.  LEGAL  PROCEEDINGS

     There  are  no  legal  proceedings  against  the Company and the Company is
unaware  of  such  proceedings  contemplated  against  it.

ITEM  2.  CHANGES  IN  SECURITIES

     Not  applicable.

ITEM  3.  DEFAULTS  UPON  SENIOR  SECURITIES

     Not  applicable.

ITEM  4.  SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS

     Not  applicable.

ITEM  5.  OTHER  INFORMATION

     Not  applicable.

ITEM  6.  EXHIBITS  AND  REPORTS  ON  FORM  8-K

     (a)     Exhibits

     (b)     Reports  on  Form  8-K

     There  were no reports on Form 8-K filed by the Company during the quarter.


                                      -11-
<PAGE>

                                   SIGNATURES

     Pursuant  to  the  requirements of the Securities Exchange Act of 1934, the
registrant  has  duly  caused  this  report  to  be  signed on its behalf by the
undersigned  thereunto  duly  authorized.

                         EXPORT  EREZ  (USA),  INC.

                   By:  /s/  Joseph  Postbinder
                        ---------------------------
                            Joseph  Postbinder


Dated  August  20,  2001














                                      -12-
<PAGE>